🇯🇵 Hiring in Japan

Employer payroll taxes and contributions

• Health insurance (Tokyo)

  Statutory

  9.85% of standard monthly pay, split 50/50 (employer 4.925%). Standard pay capped at ¥1,390,000/month.

  Source: Kyokai Kenpo: FY2026 health insurance rates by prefecture · as of 2026-11-10 · effective 2026-03-01

• Long-term care insurance (age 40–64)

  Statutory if conditions apply

  1.62%, split 50/50 (employer 0.81%).

  Source: Kyokai Kenpo Tokyo: FY2026 premium table (health, pension, levies) · as of 2026-11-10 · effective 2026-03-01

• Child and child-rearing support levy

  Statutory

  New: 0.23%, split 50/50 (employer 0.115%).

  Source: Kyokai Kenpo: Child and child-rearing support levy rate · as of 2026-11-10 · effective 2026-04-01

• Employees' pension

  Statutory

  18.3%, split 50/50 (employer 9.15%). Standard pay capped at ¥650,000/month.

  Source: Kyokai Kenpo Tokyo: FY2026 premium table (health, pension, levies) · as of 2026-11-10

• Child-rearing contribution (employer only)

  Statutory

  0.36% of standard pay (pension cap).

  Source: Kyokai Kenpo Tokyo: FY2026 premium table (health, pension, levies) · as of 2026-11-10

• Employment insurance

  Statutory

  Employer 8.5/1,000 (0.85%) for general business in FY2026; employee 5/1,000.

  Source: MHLW: FY2026 employment insurance rates (PDF) · as of 2026-11-10 · effective 2026-04-01

• Workers' accident insurance

  Statutoryverify

  Employer only; rate depends on business type (about 0.25%–0.3% for many office businesses).

  Source: MHLW: Workers' accident compensation insurance rates · as of 2026-11-10

Bonuses: statutory vs customary

Statutory and customary items are kept separate. Customary items are never added to the statutory cost.

• Statutory bonus

  Statutory

  None. Japanese law does not require a bonus.

  Source: Labor Standards Act (Japanese Law Translation, official English) · as of 2026-11-10

• Summer and winter bonuses

  Customary (not required by law)

  Customary, often quoted as months of base pay. They become binding if the contract or work rules require them. Social insurance applies to bonuses paid.

  Source: Kyokai Kenpo Tokyo: FY2026 premium table (health, pension, levies) · as of 2026-11-10

Mandatory benefits

• Social insurance enrolment

  Statutory

  Health insurance and employees' pension are mandatory for corporations, even with one employee.

  Source: JETRO: Japan's social security system · as of 2026-11-10

• Commuting allowance, retirement allowance

  Customary (not required by law)

  Very common but not required by law unless written into work rules or the contract.

  Source: MHLW: 人を雇うときのルール (rules when hiring) · as of 2026-11-10

Leave

• Annual paid leave

  Statutory

  10 days after 6 months (with 80% attendance), rising to 20 days. Employers must make sure 5 days are taken each year.

  LSA art. 39.

  Source: Labor Standards Act (Japanese Law Translation, official English) · as of 2026-11-10

• Maternity

  Statutory

  6 weeks before and 8 weeks after birth (health insurance pays an allowance).

  LSA art. 65.

  Source: Labor Standards Act (Japanese Law Translation, official English) · as of 2026-11-10

Termination, notice and severance

• Notice

  Statutory

  30 days' notice or 30 days' average wages in lieu.

  LSA art. 20.

  Source: Labor Standards Act (Japanese Law Translation, official English) · as of 2026-11-10

• Dismissal test

  Statutoryverify

  A dismissal that lacks objectively reasonable grounds and is not socially acceptable is void (Labor Contract Act art. 16).

  Source: MHLW: Labour standards · as of 2026-11-10

• Severance pay

  Customary (not required by law)

  No statutory severance. Retirement allowances and negotiated packages are customary.

  Source: Labor Standards Act (Japanese Law Translation, official English) · as of 2026-11-10

Contracts and working time

• Written terms

  Statutory

  Key terms (pay, hours, place, duties, contract period, dismissal) must be given in writing at hire.

  LSA art. 15.

  Source: Labor Standards Act (Japanese Law Translation, official English) · as of 2026-11-10

• Working hours

  Statutory

  40 hours a week and 8 hours a day; overtime needs a labour-management agreement (36 agreement).

  LSA arts. 32, 36.

  Source: Labor Standards Act (Japanese Law Translation, official English) · as of 2026-11-10

• Overtime premium

  Statutory

  At least 25%; at least 50% for overtime over 60 hours a month.

  LSA art. 37.

  Source: Labor Standards Act (Japanese Law Translation, official English) · as of 2026-11-10

• Fixed-term contracts

  Statutoryverify

  Generally up to 3 years per contract; after 5 years of renewals the employee can ask to convert to indefinite.

  Source: MHLW: 人を雇うときのルール (rules when hiring) · as of 2026-11-10

• Minimum wage (FY2026)

  Statutory

  Set by prefecture. Tokyo ¥1,280 an hour from 1 October 2026; national weighted average ¥1,177.

  Source: Tokyo Labour Bureau: Tokyo minimum wage ¥1,280 from 1 Oct 2026 · as of 2026-11-10 · effective 2026-10-01

Hiring options: EOR, contractor or your own entity

• Own entity

  Statutoryverify

  A KK or GK, then enrolment in social insurance and labour insurance.

  Source: MHLW: 人を雇うときのルール (rules when hiring) · as of 2026-11-10

• EOR

  Vendor / optionalverify

  Often delivered through a licensed staffing or dispatch structure in Japan. Ask the provider which licence it uses and who sets work rules.

  Source: MHLW: 人を雇うときのルール (rules when hiring) · as of 2026-11-10

• Contractor risk

  Statutoryverify

  If the worker is directed like an employee, labour law and social insurance apply regardless of the contract label.

  Source: MHLW: 人を雇うときのルール (rules when hiring) · as of 2026-11-10